FDIC Unveils ‘Genius’ Plan for Stablecoins – Will It Be a Genius or a Gimmick? 🤔

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Y’all know how it is-when the FDIC decides to stir the pot, it’s like a thunderstorm in a teacup. Chairman Travis Hill, that shrewd operator, has declared the agency will unveil a brand-new application framework for stablecoin issuers this month. What’s a stablecoin? Why, it’s the financial world’s version of a magic trick-no one knows how it works, but everyone’s betting on it. 🎩🐇

  • • The FDIC will propose a new application framework for stablecoins this month. 📜
  • • Prudential rules covering capital and liquidity standards are expected early next year. 🧠
  • • FDIC is also preparing guidance on tokenized deposits and bank asset tokenization. 🏦✨

Through a written testimony to be delivered before the House Financial Services Committee on Dec. 2, Hill stated that the FDIC has begun work to promulgate rules to implement the GENIUS Act, and a formal proposal is expected later this month. “We expect to issue a proposed rule to establish our application framework later this month,” he said, “and a proposed rule to implement the GENIUS Act’s prudential requirements for FDIC-supervised payment stablecoin issuers early next year.” Sounds like a recipe for chaos, but hey, who’s counting? 🤯

“We expect to issue a proposed rule to establish our application framework later this month and a proposed rule to implement the GENIUS Act’s prudential requirements for FDIC-supervised payment stablecoin issuers early next year,” Hill said.

FDIC to oversee bank-issued stablecoins

The GENIUS Act, which is considered a landmark regulatory development, was signed into law by President Donald Trump earlier this year. It outlines how multiple federal and state agencies, including the FDIC, will oversee and license stablecoin issuers operating in the United States. Ah, the GENIUS Act-a beacon of clarity and enlightenment, signed into law by the former president, who, let’s be honest, probably didn’t read the fine print. 🤡

According to Hill, the FDIC will be responsible for licensing and supervising subsidiaries of insured depository institutions that issue payment stablecoins, adding that the GENIUS Act will require several rulemakings to be completed over the coming year. “We’re like the conductor of a symphony,” Hill said, “except the instruments are all out of tune and the audience is a mix of bankers and crypto enthusiasts.” 🎻💸

The FDIC will also be tasked with outlining capital requirements, liquidity standards, and reserve asset diversification standards for stablecoin issuers, Hill added. “It’s like trying to herd cats, but with more paperwork and fewer whiskers,” he quipped. 🐱📄

To guide this process, the FDIC is taking into account recommendations published in July by the President’s Working Group on Digital Asset Markets. The group had advised regulators to clarify or expand permissible activities in which banks may engage, including the tokenization of assets and liabilities. “We’re not just playing with toys,” Hill insisted. “We’re building a bridge between the old world and the new-though the bridge might collapse at any moment.” 🌉💣

“We are also currently developing guidance to provide additional clarity with respect to the regulatory status of tokenized deposits,” Hill said.

Federal Reserve is working on stablecoin rules

The House hearing on Tuesday will also include testimony from other financial regulatory authorities, including Federal Reserve Vice Chair for Supervision Michelle Bowman. Bowman noted that the central bank is currently working with other banking regulators to develop capital, liquidity, and diversification standards for stablecoin issuers as required under the GENIUS Act. “We need to ensure the banking system is ready for the digital age,” she said, “which, let’s be clear, is just a fancy way of saying ‘we’re clueless but trying hard.’” 🤷‍♀️

“We also need to provide clarity in treatment on digital assets to ensure that the banking system is well placed to support digital asset activities. I think this includes clarity on the permissibility of activities, but also a willingness to provide regulatory feedback on proposed new use cases,” Bowman said.

After the initial proposal is released, the FDIC will seek and review public comments before finalizing the rule, a process that typically takes several months. Other agencies, such as the Treasury Department, have already advanced their own rulemaking processes under the GENIUS Act, including public consultations that concluded in November. “It’s a race to the finish line,” said no one ever. 🏁

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2025-12-02 12:56